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CAGR Insights – 27 Feb 2026

CAGR Insights is a weekly newsletter full of insights from around the world of the web.

What we’re reading this week

2026 markets may reward allocation shifts, not past winners: Read here

Sebi unveils life-cycle mutual funds; solution-oriented schemes scrapped — what it means for your portfolio: Read here

With new data sources and process upgrades, new GDP data set to capture the economy more accurately: Read here

Safe Hai, Smart Hai Kya? Check Your Insurance Returns!

LIC is known for its promise of “Zindagi ke saath bhi, zindagi ke baad bhi”. It is not just a legacy organization but also an example of what “trust” looks like in Indian financial markets.

 “Har Ghar LIC” is a truth we come across almost every day. So, we delved a little deeper into how that happened.

Ramesh (36) is sitting on his balcony, looking at his kids playing. His friend, Prakash a financial advisor, drops by. Ramesh is worried about the rising costs of education and the “what ifs” of life. Prakash senses his tension and opens the conversation.

Prakash: “Ramesh, ek baat batao—have you ever thought about a plan that builds a massive fund for your kids’ future, but also acts as a security shield that costs you practically nothing?”

Ramesh: “Sounds like a dream, bhai. But seriously, what is this policy about?”

Prakash: “Bhai, it’s a brilliant ‘Two-in-One’ product. It’s designed so you can save for your big goals while making sure your family is 100% taken care of, no matter what happens.”

Ramesh: “Okay, but asliyat mein how does it work? Calculation kya hai?”

Prakash: “Let me explain. You’re 36 right now. In this plan, you just need to set aside Rs. 51,000 every year for the next 21 years. That’s just about Rs. 4,200 a month—ek choti si bachat. Over the full term, you pay a total of Rs. 10.7 lakhs.

Now, look at how the magic happens in two scenarios:

  • Scenario 1: You reach the 21-year mark, the policy matures, and you’re standing there ready to enjoy your retirement or kids’ weddings. You get a Guaranteed Sum of Rs. 11 lakhs, plus additional bonuses. These bonuses can be as much as Rs. 10–11 lakhs extra! So, on maturity, you’re looking at more than double the amount you paid.
  • Scenario 2: If something unfortunate happens to you, we don’t wait for 21 years. Your family immediately gets the full Rs. 11 lakhs to ensure their life keeps moving smoothly.

So, Ramesh, simple logic hai: Aap rahe toh bhi paisa, aur aap na rahe, toh family ko paisa. Honestly, you’re building wealth and getting your Life Insurance practically free!

That is indeed a tempting conversation. And a few of our clients had these policies when they came to us. Most of these policies were bought between 1995-2005 when FD interest rates were around 8-10%.

By the way, the return that our clients made on this policy was around ~6.5%.
Tax Free? Yes
Guaranteed? Almost
Beating inflation? Not really

Most families buy guaranteed savings plan because they are safe, offer guaranteed returns and are a default source of funding for long term goals.

When we were growing up in early 1990s, our parents had limited investing options. They bought a house to live in (and later pass on as legacy asset), bought gold as jewellery (primarily to use in childrens’ wedding), parked most of the liquid money in FDs. Both real estate and gold were tangible assets and came with a resistance to sell. FD was liquid which also meant it was the default source of funding emergencies and all short-term goals. LIC stepped in as a wonderful way to save for goals which were 10-20 years away. Buying LIC policies were akin to “planning for the future”. It is understandable why families had multiple LIC policies then.

What is confusing is why people in their 30s today continue to hold LIC and the likes of it.

Let us elaborate on why we are not big fans of the insurance cum investment product universe. For the purpose of today’s letter, we will focus on guaranteed savings plan. Stay tuned for our deep dive on market linked ULIP Plans in March.

The XIRR Reality Check –

    In many traditional endowment conversations, agents focus on the absolute maturity amount.

    The Rule of 72 helps you reverse-engineer the “wow factor”:

    Eg: An agent says your money will double in 20 years. 72 / 20 = 3.6% (This is lower than most savings accounts).

    It is shockingly low, isn’t it? That is the “Absolute Number Trap.”

    When an agent says, “You pay ₹1 Lakh for 20 years and get ₹40 Lakh back,” it sounds like a fortune. But once you factor in the time it took to get there, you realize the growth wasn’t working hard—it was barely breathing.

    To put this into perspective we have analyzed 2 LIC policies which our clients had from early 2000’s and 2 new policies which are currently being sold. The analysis reveals a stark financial reality: none of them deliver returns that beat inflation.

    If your investment grows at 5.5% while the cost of a college degree grows at 10%, you aren’t creating wealth; you are losing purchasing power.

    The “Simple” vs. “Compound” Trap

      One of the “opaquest” parts of traditional insurance is the way returns are calculated. Most LIC policies use a Simple Reversionary Bonus.

      High Upfront Leakage (Commissions)

      When you pay your first LIC premium, a significant portion—often 25% to 35%—goes straight to the agent as commission. Subsequent years see a 5% drain.

      Just for context, Mutual Funds have an Expense Ratio of just 0.4% to 2%.

      This explains the push nature of LIC salespersons to sell LICs to families. The revenue is too lucrative. And this is not just for LICs – this is true for all insurance cum investment products.

      Under-Insurance: The Silent Risk

      These insurance and guaranteed savings plan bundle insurance and investment. This usually results in:

      Low Life Cover: A ₹1 Lakh annual premium might only give you a ₹10 Lakh cover. If the breadwinner passes away, ₹10 Lakhs is rarely enough to sustain a family for more than a year or two.

      Exit Trap – One major drawback of traditional LIC policies is limited liquidity. Once you invest, it’s difficult to exit without incurring significant losses.

      For comparison:

      • A Fixed Deposit (FD) can be broken early, usually with a small penalty of around 1%.
      • Most Mutual Funds (MFs) allow you to redeem after 1 year with no exit load.

      When you lock in your money and give up easy access, your investment should ideally offer a higher return as a premium for this illiquidity.

      Illiquid:

      LIC sells most of its traditional policies as long-term commitments — 15, 20, even 25 years. The pitch is simple: stay invested for the long term and you’ll benefit.

      And that logic is fair — every genuine long-term instrument rewards you for staying invested:

      • Equity rewards patience with growth and compounding.
      • PPF rewards lock-in with tax-free compounding.
      • Fixed deposits reward tenure with higher interest for longer terms.

      Wealth creation requires the ability to pivot.

      • LIC: Policies are rigid. If you stop paying premiums in the first few years, you risk losing your principal. Surrendering a policy often results in a massive “haircut” on your savings.
      • Equity: Equity investments or mutual fund SIPs allow you to pause, stop, or withdraw your contributions at any time (subject to minor exit loads or taxes), giving you the freedom to manage life’s emergencies without jeopardizing your hard-earned capital.

      The most effective way to build wealth is to stop treating insurance as an investment and start treating it as a utility.

      Conclusion:

      Insurance cum investment savings plan were relevant when alternatives were limited. Today, they happen to be a sub-optimal investing choice. They sell safety but the real risk is not beating inflation. The real risk is not having enough when we need different milestones of our life. And these products do very little to cater to that.

      We therefore always recommend having a Term Plan to protect the risk of loss of life (and thus earning capacity) and having an investment plan which has got nothing to do with insurance.

      In case you have policies which you want us to look at, feel free to reach out to us on https://www.cagrfunds.com/contact

      ****

      That’s it from our side. Have a great weekend ahead!

      If you have any feedback that you would like to share, simply reply to this email.

      The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

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      CAGR Insights – 20 Feb

      CAGR Insights is a weekly newsletter full of insights from around the world of the web.

      What are we reading this week?

      • Why are Indian households shifting from fixed deposits to SIP investments? Read here
      • The Reign of the Dollar Is Coming to an End. What Investors Can Do About It. Read here
      • India is rising in the new world order: Read here

      How to Make Your Bank Actually Listen

      The script-flipping moment in banking doesn’t happen when you scream at a customer service executive. It happens when you stop being a “customer” and start being a “complainant” under the RBI’s Integrated Ombudsman Scheme.

      Why Do Banks Ignore You?

      Banks are slow to change. Basically, their customer service is set up to slow you down. They use robotic, copy-pasted replies to wear you out until you eventually just give up.

      But there is a “trapdoor” in the Indian financial regulation system. When a bank receives a notice from the RBI Ombudsman, the cost of fighting you suddenly becomes higher than the cost of fixing the mistake.

      The Playbook: Where the Ombudsman Actually Wins

      RBI Ombudsman won’t fix every small, annoying thing that happens. However, for big problems that are clearly the bank’s fault (like a “system” error), it works like a precise tool to cut through the bank’s excuses and fix the specific issue. Here is where you use it:

      When the Bank Locks the Door and Calls You a Trespasser

      Anirudh was a responsible customer who never missed a single payment. He was incredibly proud of his perfect credit score. But one day, the bank made a mistake that he couldn’t fix just by being a good customer. As his credit card bill due date approached, Anirudh tried to log in to pay. The card was gone. No “Renew” button.

      • No “Pay Now” option.
      • The banking app acted as if he had never owned a credit card in his life.

      The bank had deactivated his old card but failed to deliver the new one. They essentially locked the front door of the bank while he was standing outside with the cash in his hand.

      Anirudh didn’t sit back. He sent an urgent email before the due date:

      “I cannot see my card. I cannot pay through the app. Please, auto-debit the dues from my savings account immediately so I stay on track.”

      The bank’s response? Total silence. No auto-debit happened. No one called him back. He was trapped in a digital void.

      Nine days later, the system finally “woke up.” Anirudh paid the full amount the second the button reappeared. He thought the glitch was over, but he was wrong.

      Months later, he applied for a home loan. The loan officer frowned at the screen. “Sir, you have a 9-day delinquency on your record. Your CIBIL score has cratered by 50 points.”

      Because the bank’s computer saw a late payment, it didn’t care why it was late. To the algorithm, Anirudh was now a “risky borrower.” His home loan interest rate was hiked, potentially costing him lakhs of rupees over the next two decades.

      When Anirudh complained, the bank’s customer service gave him the ultimate insult: “The payment was late. The system is automated. We cannot change it.”

      Anirudh stopped trying to be “nice” and started playing by the bank’s own legal rules.

      He didn’t send an angry rant. He sent a Timeline of Failure.

      • Evidence A: The date his card was deactivated without notice.
      • Evidence B: The email he sent before the due date asking for an auto-debit.
      • Evidence C: The proof that the bank failed to deliver the renewal card.

      Under the cold light of a regulatory inquiry, the bank’s “automated system” excuse collapsed. They admitted:

      • The card had expired.
      • The renewal was never delivered.
      • The customer was physically prevented from paying.

      The bank was forced to contact CIBIL and suppress the DPD (Days Past Due) entry. Anirudh’s score was restored to its rightful place.

      But this victory didn’t happen overnight, it required navigating a specific legal hierarchy that every banking customer must follow.

      You cannot jump straight to the RBI. The Ombudsman is the Level 3 boss; you must clear Level 1 and 2 first.

      Step 1: The Paper Trail (Day 1)

      Skip the phone calls. Send an email to the bank’s Grievance Redressal Officer (GRO). This starts the 30-day “cooling-off” period.

      Email the bank and list exactly when each problem happened. Show that you tried to fix it, but their customer service failed to help. Include proof (like screenshots or emails) for everything.

      Step 2: The Wait (Day 31)

      If the bank:

      1. Rejects your complaint.
      2. Offers an unsatisfactory “middle ground.”
      3. Simply doesn’t reply for 30 days. You are now eligible.

      Step 3: The CMS Portal (The Final Move)

      Go to the RBI Complaint Management System (CMS) website. This is where the narrative shifts. You aren’t arguing with a bot anymore; you are filing a case that goes into the bank’s “Regulatory Non-Compliance” statistics.

      The Moral of the Story

      In the digital age, a bank’s “glitch” is often treated as the customer’s “fault.” If a bank blocks your ability to pay, don’t just wait for them to fix your attempt to pay immediately. That paper trail is the only thing that will save your credit score when the system turns against you.

      ****

      That’s it from our side. Have a great weekend ahead!

      If you have any feedback that you would like to share, simply reply to this email.

      The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

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      CAGR Insights – 13 Feb 2026

      CAGR Insights is a weekly newsletter full of insights from around the world of the web.

      What we’re reading this week

      • 10 changes in draft Income-tax Rules 2026 : Read here
      • Will capex finally help drive India’s economic growth? Read here
      • Why Consensus Fails: Read here

      Impact of the India-EU FTA Deal on Key Export Sectors

      On 27 January 2026, at the 16th India–EU Summit, India and the European Union (EU) concluded a historic, comprehensive Free Trade Agreement (FTA). This agreement is intended to deepen and stabilize trade between the two major markets. It will also be linking India, the world’s fourth-largest economy, with the EU, the world’s second-largest economic bloc.

      What is a free trade agreement?

      1. In contrast to what the name might suggest, what gets agreed upon in a free trade agreement (FTA) is not all that “free” and is not solely about trade.
      2. An FTA is a comprehensive form of collaboration with legally binding agreements in many domains. It establishes new ground rules on, for example, product requirements, import tariffs and taxes, and company rights such as intellectual property and protection.

      This deal will be pivotal in the history of both economies. In this article we will focus on the key gains for the Indian economy.

      Immediate duty elimination lifts competitiveness for India’s labor-intensive sectors. Further, staged reductions and tariff-rate quotas create additional pathways in more sensitive product lines. This will help firms plan capacity, contracts, and investment with greater certainty.

      For Indian producers, the upside is not just higher volumes but also a push toward upgrading. This is because sustained EU market access typically requires tighter standards, traceability (source of origin), and process discipline. While some of these conditions have been relaxed in the FTA, they are not eliminated. This means that firms will have to adapt to move up the value chain. Those that cannot, may remain stuck in low-margin segments.

      The question now is what lies ahead for India and how it can translate improved market access into sustained gains across these key sectors. The opportunity is significant, but real outcomes will depend on how effectively Indian firms and policymakers address competitiveness, compliance, and scale.

      Textiles

      • For an industry that employs over 45 million workers across spinning, weaving, knitting and garmenting, and that has labored under uneven trade terms for years, the moment felt historic.
      • In fiscal 2024-25, India’s textile and apparel exports totaled about $37 billion (India is amongst the top 5 global exporters of textile and clothing). Out of this ~20% of the exports are currently made to EU. The tariff reduction is important because it restores parity with competitors such as
      • Bangladesh, which benefits from zero duty under the EU’s Everything but Arms scheme. But Bangladesh is set to lose this zero-duty access from November 2026. This change will give India a major competitive advantage in textiles.
      • Vietnam and Turkey, which enjoy preferential access through their regional trade arrangements. However, rising wages in Vietnam and currency volatility in Turkey have increasingly pushed global brands to diversify their sourcing.
      • Larger firms such as Arvind, Shahi Exports, KPR Mills and Welspun have already invested heavily in automation, sustainability and traceability systems to align with rising European standards.
      • Smaller manufacturers are adopting wastewater recycling, cleaner energy systems and digital compliance platforms that meet strict EU due diligence rules.
      • Textile industry groups are now seeking supportive measures from the Centre to help smaller exporters meet compliance costs. These include credit lines tied to green upgrades, streamlined imports of advanced machinery and logistics enhancements that can cut freight costs and delivery times.

      Engineering Goods

      • The EU currently absorbs ~17% of India’s engineering exports, translating to roughly $20 billion annually.
      • Key export categories include iron and steel ($6-7 billion), industrial machinery ($5 billion), and auto components ($3 billion).
      • With shipments to the EU reaching nearly $11 billion in November 2025, exporters expect the FTA to further accelerate momentum.
      • This deal is also going to make MSME’S gain significantly. 60% of EEPC India’s members are MSMEs, largely involved in the exports of iron and steel products as well as electrical machinery.
      • However, the benefit of this agreement will be subject how companies are able to resolve challenges posed by CBAM.
        • CBAM is a climate-linked trade policy designed to prevent “carbon leakage” by imposing a carbon cost on imports of emission-intensive products.
        • For Indian engineering exporters, especially in carbon-intensive segments such as iron, steel, and aluminum, CBAM could increase compliance costs unless firms are able to demonstrate lower emissions intensity or align with EU carbon pricing norms.
        • Exporters have flagged challenges around access to verified emissions data, certification costs and the absence of mutual recognition frameworks.
      • The iron and steel industry accounts for 90% of India’s CBAM exports to the EU and is, therefore, particularly exposed. Although these exports accounts for only 0.2% of the country’s GDP, the CBAM would have a significant impact on Indian exports.
      • The effects of CBAM on the Indian steel industry are likely to be uneven and unfair, with the larger players adapting more quickly and relatively more easily than the smaller players.
      • On the positive side, Indian exporters can shift to more environmentally friendly production methods to mitigate the impact of the tax. This could result in increased investment in decarbonization technologies and processes in the sectors concerned.
      • Initiatives taken by Indian Companies to meet the standards of CBAM
      • JSW Steel is strengthening systems to track and report product‑level carbon emissions, enabling accurate carbon footprint measurement required for EU imports.
      • L&T reports total emissions of about 8.1 billion kg CO₂e in 2025 across Scope 1 (direct), Scope 2 (energy), and Scope 3 (supply‑chain) emissions. A majority (~97%) of emissions come from Scope 3, especially from purchased goods and services — showing they’re tracking value‑chain emissions, which is essential for comprehensive carbon disclosures that are relevant under mechanisms like CBAM. It secured a US $700 m sustainability‑linked trade facility linked to greenhouse gas emission intensity and water‑use metrics embedding climate performance into financing decisions. L&T aims for carbon neutrality by 2040.

      Organic Chemicals

      • The FTA is going to strengthen India’s position in becoming a global chemical manufacturing hub.
      • But the FTA’s impact won’t obviously be uniform across the chemical landscape. Here’s where the surge is expected to be most noticeable: 
      • Specialty Chemicals
      • Agrochemicals
      • Dyes & Pigments
      • Pharma Intermediaries and API’s
      • Benefits of the “Co-Equal Rule”
      • The India-UK FTA introduces a new concept called the co‑equal rule, which is a big win for exporters in sectors like specialty chemicals.
      • Traditionally, to get tariff benefits under a trade agreement, a product had to meet specific Rules of Origin, which means a certain percentage of its materials had to come from the exporting country.
      • This often made it harder for exporters who sourced ingredients or components from different countries.
      • With the co-equal rule, materials from India and the UK will be treated equally when calculating whether a product qualifies as “originating” for duty-free access.
      • For example, if an Indian company is making a specialty chemical that uses some inputs from the UK and some from India, with the co-equal rule, both sets of inputs will now count toward meeting the requirement. The final product will still qualify for tariff-free export.
      • Strategic Benefits for the Indian Chemical Industry
      • Regulatory Support and Faster Market Access – One of the most powerful aspects of the India-UK FTA is the recognition of Indian regulatory systems. By aligning India’s GMP with UK standards, the agreement will shorten product approval timelines and reduce redundant audits. This will not only lower compliance costs for Indian exporters but also make it easier for UK buyers to source from Indian suppliers with confidence.
      • Boost to SME Exporters and Tier-II Cities – India’s small and mid-sized chemical firms in hubs like Vapi, Surat, Ankleshwar, and Dahej have powered exports but struggled to enter markets like the UK due to high tariffs and red tape. The new India-UK FTA cuts these barriers, letting SMEs access the UK directly with simpler rules and lower costs. Per IBEF, this could boost SME share in bilateral trade by 20-25% within two years, creating jobs and balanced growth.

      Conclusion

      • What sets this trade agreement apart is its potential to change how the world sees Indian industries.
      • It’s not just about increasing exports or saving on tariffs. It’s about shifting from short-term opportunities to long-term partnerships. With better regulatory alignment and more predictable compliance rules, Indian companies now have a real chance to become trusted suppliers in the global market.
      • This shift is also happening at a crucial moment. Many countries are rethinking their dependence on single-source suppliers like China. India is stepping up with strong scientific talent, growing infrastructure, and a clear policy push.
      • But this opportunity comes with responsibility. The real impact will depend on how quickly Indian firms adapt, upgrade, and build the kind of trust that lasts.

      Sources

      ****

      That’s it from our side. Have a great weekend ahead!

      If you have any feedback that you would like to share, simply reply to this email.

      The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

      Posted on

      CAGR Insights – 6 Feb 2026

      CAGR Insights is a weekly newsletter full of insights from around the world of the web.

      What we’re reading this week

      Domestic Investors Are Changing the Market Story – Read here

      Sebi proposal could simplify withdrawals from demat mutual funds – Read here

      Why India is resetting GDP and CPI base years and what the change means – Read here

      US-India Trade Deal: A Game Changer or Political Gamble?

      India signed two big trade agreements in just two weeks.

      But they are quite different in their structure.

      One is a full-fledged Free Trade Agreement (FTA) with the European Union—structured, rule-based, and built for the long haul.
      The other is a “deal” with the United States.

      And that word—deal—changes everything.

      And while we will talk about EU FTA deal in detail in our next newsletter, today we will focus on what the US “deal” means for us and our economy.

      Unlike an FTA, the US–India arrangement doesn’t come with iron-clad institutional safeguards. It’s far more dependent on political sentiment. And when the dealmaker is Donald Trump, mood swings aren’t a footnote—they’re a risk factor. A single shift in narrative, and what’s agreed today can be questioned tomorrow.

      So, before we celebrate both agreements in the same breath, it’s worth pausing. Because one of these is clearly not like the other.

      But to understand where this deal might take us, we first need to rewind.

      So, let’s go back to where it all started.

      Table 1.1

      The tariff dispute dates back to early 2025, when the Trump administration, pursuing a tough trade agenda, launched a series of tariffs under what it called “reciprocal tariff” policies aimed at reducing the US trade deficit with major partners.

      This was the biggest overhang on Indian markets and with favorable outcome on this front, equity markets are poised for gains.

      India now has a lower tariff rate than ASEAN countries. Most of them are stuck at 19%, with Vietnam at 20%. Further, China is subject to additional penalties for trans-shipment of Chinese goods. All of this together makes it competitively better for Indian exporters.

      Table 1.2

      It is perversely entertaining that 18% is now considered an awesomely “low” tariff rate given that we were at a very low rate till a few quarters before. But given the circumstances, this is nonetheless a boon to India.

      Let us see why.

      The US has been one of India’s most important export destinations for decades. In 2024-25, almost 20% of our exports went to the US (Table 1.1). And this is not just last year. Our exports to the US has always been a substantial portion of our exports (Table 1.2).

      Against that backdrop, this deal marks a pivotal moment in India’s trade history.

      Table 1.3

      Table 1.4

      If the deal holds—and if it survives Trump’s occasional policy frenzies—it could do more than just boost trade numbers. It may well act as the spark that reignites momentum in Indian equity markets, especially in sectors closely tied to exports and global demand.

      No official fact sheet has been released regarding the deal, but we have tried to analyze the sectoral impact of this deal.

      Tariff relief, not normalization

      Table 1.5

      Feb’26 is a step-down from very high tariff of 2025. Peak US tariffs seen in Jul’25 (often 35% to 64%) have eased, but most key rates are still at 15% to 18%. We are still far from the “pre-Trump” rates and the question remains whether we reach there or not.

      The US export basket is $83.6 bn, and manufactured goods alone are ~$61 bn, now facing a mid-teens tariff wall.

      So what? Unless tariffs normalize further, we can expect margin pressure, price pass-through attempts, and export diversion away from the US, especially in labor-heavy categories (textiles, garments, leather, gems). More progress is needed on tariffs. Or, should we believe that the world trade order has permanently changed? Only time will tell.

      Textiles and Apparels

      The textiles and apparel sector will face a great relief from the reduced US tariffs.

      Table 2.1

      Exports, including cotton garments and home textiles, from India face stiff competition from Bangladesh, Vietnam and other low-cost manufacturing hubs.

      The reduced levy of 18% on Indian garments is less than the 20 per cent imposed by the US on Bangladesh or Sri Lanka. This could lead to textile orders returning to India after months of tariffs as high as 50% pushed some production to countries like Bangladesh.

      Table 2.2

      The below pricing data confirms that Bangladesh’s volume growth came at the expense of profitability. The country’s average unit prices fell 0.63%year-on-year, reflecting aggressive price concessions to secure rushed orders.

      Table 2.3

      Only India managed to post a price increase, suggesting comparatively stronger buyer confidence in its product mix, compliance positioning, and perceived value addition. Bangladesh, by contrast, joined the group of sourcing destinations trading margin for market share.

      Gems and Jewelry

      There is much to rejoice in India’s gems and jewelry sector. The US is its largest export market, accounting for about 30% of industry sales.

      Table 3.1

      In 2025, reciprocal U.S. tariffs disrupted trade flows to USA sharply. Duties on polished diamonds and colored gemstones surged from 0% to 10% in April, then to 50% by August.

      This led to a 44.42% plunge in India’s gem and jewelry exports to the U.S. from April–December 2025 (US$ 8,691.25 million to US$ 3,862.08 million).

      The tariff cut lowers costs for US importers, provides immense relief to diamond jewelry manufacturers enhancing the competitiveness of Indian diamond jewelry in the largest export market. This is poised to revive demand and stabilize operations.

      Seafood

      The seafood sector, especially shrimp and frozen food exporters, is highly dependent on the US market. With slashed taxes on Indian exports, seafood companies are likely to report improvement in earnings visibility and demand recovery.

      Table 4.1

      Table 4.2

      Fish exports to the US fell 15% by volume to 201,501 tons in the April-November period of the current fiscal year, while value declined 6.3% to USD 1.72 billion from USD 1.84 billion a year earlier, SEAI General Secretary K N Raghavan said.

      The decline came after the US imposed 50 per cent tariffs on Indian goods in August 2025 – the highest for any Asian country – including a 25% penalty linked to India’s purchase of Russian oil.

      With the latest reduction, India is expected to compete more effectively with rival exporters such as Ecuador, Indonesia, Thailand and Vietnam.

      Chemicals

      The Indian Chemical sector has been under pressure since last 2-3 years majorly due to global slowdown, Intense pricing pressure due Chinese competition, volatility in raw material prices and rising fixed costs. Besides this the sector witnessed incremental tariffs by US to ~50%.

      Table 5.1

      Table 5.2

      We believe the recent announcement of tariff reduction is sectoral positive as the reduction in US tariffs to ~18% is likely to provide a level playing ground to India with other competitors such as China (47.5% tariff), South Korea, Japan, EU (15% tariff), Vietnam (20% tariff), Malaysia, Indonesia, Philippines (19% tariff).

      But all is not good yet. Some sectors stay untouchable by tariff cuts, thanks to the powerful shield of US’ Section 232!

      Section 232 of the Trade Expansion Act of 1962 is a U.S. law authorizing the President to impose tariffs or restrictions on imports if the Department of Commerce determines they threaten national security. It was created by Congress and signed into law by President John F. Kennedy.

      The law’s main goal is to protect U.S. industries that are deemed essential for national security. If a product or material is important for the U.S. to maintain its defense, economy, or infrastructure, the government can act to make sure foreign competition does not harm those industries.

      Who Gets Affected?

      Products in industries like steel, aluminum, automobiles, timber, copper, and ships are often protected under Section 232 because they are considered vital for the country’s defense, infrastructure, and security. These sectors are seen as critical for making military equipment, building infrastructure like roads and bridges, or for other national security needs.

      How It Works:

      If there’s a threat to these industries from foreign imports (i.e., foreign countries are flooding the U.S. market with cheaper products that hurt local businesses), the U.S. government can impose tariffs (higher taxes) on these foreign goods to make them more expensive and less attractive to buy.

      What this means for India?

      • India too has exposure to sectors who fall under the Ambit of the Section 232 tariffs. According to available data, one-tenth of India’s exports or over $8 billion worth of exports may still face higher tariffs.
      • Sectors that fall under the ambit of Section 232 include Automobiles, Steel, Aluminum, Timber, Copper and trucks & ships. They continue to remain under Section 232 due to national security reasons.
      • According to the UN COMTRADE data, autos form the biggest exposure to this Section 232 with shipments worth nearly $4 billion falling under the national security lens. Steel exports were worth $2.5 billion, while Aluminum exports were close to $800 million. These sectors contribute to nearly 85% of total Indian exports which remain at risk under Section 232.

      In conclusion, while the US–India trade “deal” offers promising benefits, particularly for sectors like textiles, gems, and seafood, it comes with a level of uncertainty due to its dependence on shifting political dynamics. Unlike the more structured EU agreement, the US deal’s success is intricately tied to the political climate, with the potential for sudden changes in trade policies. If the deal holds and the tariff reductions continue, it could revitalize key sectors of the Indian economy, especially in export-driven industries. However, for the deal to truly deliver long-term value, it will require political stability and continued efforts to address the remaining tariff challenges.

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      That’s it from our side. Have a great weekend ahead!

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